PHILADELPHIA — Aberdeen Standard Investments (ASI) has completed the conversion of one of its funds to become one of the first asset managers to offer a US-domiciled, actively managed open-end mutual fund investing predominantly in the China A share equity market.
Effective today, the Aberdeen China Opportunities Fund has been renamed the Aberdeen China A Share Equity Fund. The fund will now invest predominantly in A share equity securities of mainland-China-based companies that are denominated in Renminbi and listed on the Shenzhen and Shanghai stock exchanges.
The changes are being made to exploit the significant opportunity presented by, and interest from US clients in accessing, the burgeoning China A share equity market. In spite of economic growth moderating in recent years, China still represents a compelling growth story. The nature of economic growth in China is maturing, with more derived from the services sector in the economy and the middle class continuing to expand apace.
The China A share equity market provides a vast investment opportunity with more than 3,400 listed companies and a market capitalization in excess of $5.5 trillion across a broad swath of sectors. Increasing foreign participation should help improve corporate-governance standards, while the A shares market is less correlated to global markets and is predicted to have strong earnings growth compared to global peers.
The fund’s portfolio is substantially similar to that of the successful Luxembourg-domiciled Aberdeen Global China A Share Equity Fund, which has gathered $2.6 billion in AUM since its inception in 2015. The fund is managed by the 50-strong Asian Pacific equities team that has been investing in China since the early 1990s.
The team bases investment decisions on fundamental research and a disciplined, active approach, which uses ESG assessment and corporate engagement to enhance returns. This active approach has helped the Luxembourg-domiciled Aberdeen Global China A Share Equity Fund achieve significant outperformance against the benchmark since inception.
Previously, the Aberdeen China Opportunities Fund had a mandate to invest in equity securities issued by Chinese companies, including A Share equity securities. The conversion will see the fund required to invest at least 80% in China A Share securities and ETFs. Effective May 1,2019, the fund’s management fee has been reduced to 0.85% from 1.25% at the initial asset level, and similarly by 0.40% at each asset-level breakpoint thereafter. Additionally, effective on the same date, the fund’s voluntary expense limitation threshold has been reduced to 0.99%, from 1.62%.
Chris Demetriou, Head of Americas, commented: “This is one of the first US-domiciled, actively managed mutual funds to invest predominantly in the Chinese A share equity market.
Historically there have been relatively high barriers to entry for US investors to access the sort of companies that form the backbone of China’s infamous consumption story. The China A shares market offers the opportunity to access the compelling growth story that has seen China become the world’s second largest economy.”
The Chinese A Share equity market is composed of renminbi denominated shares traded on the Shanghai and Shenzhen exchanges. In 2017, the market capitalisation of listed domestic companies in China was only surpassed by that in the US, according to the World Bank.
The market is still relatively young, with the companies first listed in the early 1990s. Foreign participation has historically been low with high barriers to entry, but Chinese authorities have made a concerted effort to increase foreign participation.
Notes to editors
- Aberdeen Standard Investments has relationships with around 500 financial sponsors across approximately 1000 funds globally.
- Aberdeen Standard Investments is a leading global asset manager dedicated to creating long-term value for our clients, and is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
- With over 1,000 investment professionals we manage $735.5 billion* of assets worldwide. We have clients in 80 countries supported by 50 relationship offices. This ensures we are close to our clients and the markets in which they invest.
- We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, strong investment performance.
- Aberdeen Standard Investments is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies.
- Standard Life Aberdeen plc is headquartered in Scotland. It has around 1.2 million shareholders and is listed on the London Stock Exchange. The Standard Life Aberdeen group was formed by the merger of Standard Life plc and Aberdeen Asset Management PLC on August 14, 2017.
*Standard Life Aberdeen AUM as of June 30, 2018.
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